Correlation Between IAMGold and First Quantum

Can any of the company-specific risk be diversified away by investing in both IAMGold and First Quantum at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IAMGold and First Quantum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IAMGold and First Quantum Minerals, you can compare the effects of market volatilities on IAMGold and First Quantum and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IAMGold with a short position of First Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAMGold and First Quantum.

Diversification Opportunities for IAMGold and First Quantum

0.03

Correlation Coefficient

IAMGold  First Quantum

Significant diversification

The 3 months correlation between IAMGold and First is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding IAMGold and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals and IAMGold is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on IAMGold are associated (or correlated) with First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of IAMGold i.e., IAMGold and First Quantum go up and down completely randomly.

Pair Corralation between IAMGold and First Quantum

Assuming the 90 days trading horizon IAMGold is expected to generate 1.01 times more return on investment than First Quantum. However, IAMGold is 1.01 times more volatile than First Quantum Minerals. It trades about 0.04 of its potential returns per unit of risk. First Quantum Minerals is currently generating about -0.02 per unit of risk. If you would invest  764.00  in IAMGold on December 2, 2024 and sell it today you would earn a total of  33.00  from holding IAMGold or generate 4.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

IAMGold  vs.  First Quantum Minerals

IAMGold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IAMGold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, IAMGold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

First Quantum Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Quantum Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, First Quantum is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IAMGold and First Quantum

The main advantage of trading using opposite IAMGold and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAMGold position performs unexpectedly, First Quantum can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Quantum will offset losses from the drop in First Quantum's long position.

The idea behind IAMGold and First Quantum Minerals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.